President Cyril Ramaphosa has announced a R500 billion support package to help South African businesses and citizens during the COVID-19 pandemic.
Ramaphosa said some of the funding will be raised through the reprioritisation of around R130 billion within the current budget.
The rest of the funds will be raised from both local sources, such as the Unemployment Insurance Fund, and from global partners and international finance institutions.
The World Bank, International Monetary Fund, BRICS New Development Bank and the African Development Bank have been approached, he said.
Ramaphosa said the government’s economic response to the coronavirus crisis can be divided into three phases.
- The first phase began in mid-March when the coronavirus pandemic as a national disaster was announced. The measures included tax relief, the release of disaster relief funds, emergency procurement, wage support through the UIF and funding to small businesses.
- The government is now embarking on the second phase, which includes the economic support package of R500 billion.
- The third phase is the economic strategy which will be implemented to drive the recovery of the economy as the country emerges from this pandemic.
How the money will be spent
The President gave a breakdown of how the R500 billion will be made available to South African citizens and businesses.
- R20 billion will be directed to fight the pandemic and support infected people.
- R20 billion will be made available to municipalities for emergency water supplies, increased sanitisation of public transport and facilities, and providing food and shelter for the homeless.
- R50 billion will go towards relieving the plight of those who are most desperately affected by the coronavirus.
- R100 billion will be set aside for protection of jobs and to create jobs.
- R40 billion has been set aside for income support payments for workers whose employers are not able to pay their wages.
- R2 billion will be made available to assist SMEs and spaza shop owners and other small businesses.
- A R200 billion loan guarantee scheme will be launched in partnership with the major banks, the National Treasury and the South African Reserve Bank.
- R70 billion in tax measures to bring cash flow relief or direct payments to businesses and individuals.
The R50 billion to help the most affected by the coronavirus will be handed out as follows:
- Child support grant beneficiaries will receive an extra R300 in May and from June to October they will receive an additional R500 each month.
- All other grant beneficiaries will receive an extra R250 per month for the next six months.
- A special Covid-19 Social Relief of Distress grant of R350 a month for the next 6 months will be paid to individuals who are currently unemployed and do not receive any other form of social grant or UIF payment.
Ramaphosa added that they will follow a risk-adjusted approach to the return of economic activity.
This will be done through balancing the continued need to limit the spread of the coronavirus with the need to get people back to work.